2020 Ad Outlook – Ad Buyer Survey VIII

The Cowen Insight

We surveyed 50 US ad buyers representing ~$12.5BN in ad spend in early Dec ‘19. Ad buyers are more bullish on ’20 US ad spend (vs. ’18/’19) given robust Digital growth, solid macro backdrop and strong ROI. Digital will continue to gain share at the expense of traditional mediums, driven by Video & Social growth. Amazon, Instagram and YouTube are the biggest expected ad share gainers in the coming years.

Cowen’s 8th Annual Ad Buyer Survey: Key Trends & Stock Conclusions

1. US Ad Buyers More Bullish Entering ’20: The ad buyers overall expect their ’20 US ad spend to rise 4.4% y/y on a spend-weighted basis, above +3.8% expected for ’19, as ad buyers indicated key drivers including: further robust Digital growth, strong consumer / macro, and high return on ad spend.
2. Ad Buyers Surveyed Expect Digital to Continue L-T Share Gain Trend at Expense of Trad’l Mediums: Key drivers: 66% expect ad spend shifting from TV, 58% expect Digital to drive ad spend growth and 28% expect shift from non-TV ad mediums. We forecast the US Digital Ad market rises to $146BN in ‘20, +16% y/y and ~57% of total US advertising vs. ~53% in ’19.
3. Raising Cowen’s WW & US Digital Adv. Forecast: We forecast WW Digital adv. of $357BN in ’20, +16% y/y and rising to $609BN in ’25, an 11% CAGR; we raised our established WW Digital adv. estimates ’20-’24 by low/mid single digits annually. We forecast US Digital adv. of $146BN in ’20, +16% y/y and rising to $257BN in ’25, a 12% CAGR. Key drivers include (i) Mobile (form factor) and (ii) Video and Social (channels).
4. Video Adv. Largest Share Gainer within Digital: From 19-’21, Digital Video to pick up 4% share of total Digital Ad budgets per ad buyers surveyed, aligning with cont’d shift from TV and rising Mobile Video ad effectiveness.
5. Ad Platform Share Gainers: YouTube, Instagram and Amazon are expected to pick up ~2% share of ad budgets the next two years.
6. Which Platforms Outside of GOOG and FB Could, or Are Emerging as a Meaningful Part of Your Digital Ad Spend? 40% of ad buyers listed Amazon, vs. 14% for Pinterest, and 6% for SNAP. 36% suggested GOOG and FB properties would comprise majority of their Digital Ad spend for the foreseeable future.
7. Leading Platforms for New Branding Campaigns to 13-34 Demo: Ad buyers suggested IG and YouTube were clear leaders, with SNAP also a factor. TV is not relevant for this demo at this point.
8. Leading Platforms for New Branding Campaigns to 35+ Demo: Ad buyers suggested TV still leads, but FB and YouTube closing the gap.
9. Mobile Video vs. TV: 64% of ad buyers suggested Mobile Video ads were more effective than TV vs. 62% last year.
10. User Privacy Concerns: An issue for Core FB, YouTube, IG and Ad Exchanges, while zero impact on Google Search, Amazon and Pinterest.

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